Correlation Between Samsung Electronics and ENDESA ADR
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and ENDESA ADR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Samsung Electronics and ENDESA ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and ENDESA ADR 12, you can compare the effects of market volatilities on Samsung Electronics and ENDESA ADR and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Samsung Electronics with a short position of ENDESA ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and ENDESA ADR.
Diversification Opportunities for Samsung Electronics and ENDESA ADR
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and ENDESA is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and ENDESA ADR 12 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENDESA ADR 12 and Samsung Electronics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Samsung Electronics Co are associated (or correlated) with ENDESA ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENDESA ADR 12 has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and ENDESA ADR go up and down completely randomly.
Pair Corralation between Samsung Electronics and ENDESA ADR
Assuming the 90 days horizon Samsung Electronics Co is expected to generate 2.34 times more return on investment than ENDESA ADR. However, Samsung Electronics is 2.34 times more volatile than ENDESA ADR 12. It trades about 0.16 of its potential returns per unit of risk. ENDESA ADR 12 is currently generating about 0.25 per unit of risk. If you would invest 85,600 in Samsung Electronics Co on September 14, 2024 and sell it today you would earn a total of 7,800 from holding Samsung Electronics Co or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. ENDESA ADR 12
Performance |
| Timeline |
| Samsung Electronics |
| ENDESA ADR 12 |
Samsung Electronics and ENDESA ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and ENDESA ADR
The main advantage of trading using opposite Samsung Electronics and ENDESA ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, ENDESA ADR can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ENDESA ADR will offset losses from the drop in ENDESA ADR's long position.| Samsung Electronics vs. UPDATE SOFTWARE | Samsung Electronics vs. GRIFFIN MINING LTD | Samsung Electronics vs. PSI Software AG | Samsung Electronics vs. MAGIC SOFTWARE ENTR |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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